The Textile Industry – Part II

A brief outlook on The Indian textile industryAt a broader level Indian Textile Industry can be divided into two categories: Organized and Unorganized.Despite India being an emerging economy, the Indian Textile Industry is largely unorganized and still relies largely on traditional means in cloth manufacturing and is also highly labor intensive in nature. The clothes are produced with the help of hands via weaving and spinning methods.The remaining half of the industry is very much organized with high importance endowed on capital intensive production processes. The sector depends on sophisticated mills by way of which technologically superior machines are utilized for mass production of textile products.Further classification of Indian Textile Industry• Textile industry employing fiber derived from man made means or natural cotton.
• Yarn industry using fiber or filament, similar to the man made variety
• Textile industry centered on production of wool, its offshoots and woolen products.
• Textile industry based on production and processing of Jute.
• Textile industry centered on mass production of natural silk and final products from silk
• Handloom Industry
• Handicrafts industry which is primarily unorganized in natureThe textile industry employing fiber derived from man made means or natural cotton.This sector is looked upon as the largest producer of textile products. In terms of employment opportunities, the sector employs maximum number of people in the entire industry which is said to be around a mind-boggling one million workers. According to the latest estimates by Ministry of Textiles, the total number of mills in this particular sector stood at 1818 in number. The total capacity of all these mills total to* 35.37 million spindles and * 0.45 million rotors In between April -December 2009, the production of cloth made from man-made fibre accelerated by 21.3 percent.Spun Yarn industry can further be segregated into two sub-sectors:-• Cotton Yarn Manufacturing industry: The production is directly related to the production of cotton on year-on-year basis, whose production in turn largely depends on the vagaries of nature. Therefore it is widely observed that the rate of production in this sector, more often than not fluctuates.• Non cotton yarn producing industryThe industry is growing at an unprecedented speed for the rate of production in this sector has accelerated on a consistent basis. The period between 1999 and 2005, the capacity of this sector increased between 80 and 93 percent.Organized sector is going through a rough patch and the reason cited being the tweaking of the structural set-up. Of late the weaving sector has been separated from the spinning sector causing the rise of powerlooms of decentralized nature. In the recent years the production capacity of the organized sector plummeted by 0.54 lakh between March 2000 and January 2007.Nonetheless, the organized sector seems to be fairing better than unorganized one with a yearly growth rate of almost 5.4 percent.Yarn industry utilizing fiber or filament can be divided into two divisions:-• Industry type consisting production of cellulosic fibers or filaments
• Industry type consisting production of non-cellulosic fibers or filamentsTextile industry centered on production of wool, its offshoots and woolen products.• Its export oriented
• Production base is mainly located in the rural areas
• Both organized as well as non-organized units dominate this sector.India’s contributes nearly 1.8 percent of total production of wool in the world. This sector is known for its high employment generation capacity. By 2006, twenty seven lakh workers were working in this sector. At a broader level, the total raw wool production in India can be segregated into three major grades:-• Carpet Grade comprising 85% of the total raw wool production
• Coarse Grade comprising 10% of the total raw wool production
• Apparel Grade comprising 5% of the total raw wool productionNonetheless, it has been found that the demand for raw wool in India is more than the output; hence large part of the local demand is met through import of raw wool. Wool is said to be the only natural fibre in which the country has not yet achieved self-sufficiency.The sector also attracts foreign exchange earning from export of woolen products.At present there are 958 woolen units in the country, the majority of which fall in the small scale sectorSome of the exclusive items used in the production of wool fiber in India include: Pasmina and Angora.Textile industry based on the production and processing of Jute.Significant part of Eastern India is into production and processing of Jute, West Bengal in particular. Nearly 4 million farm families depend on it. The industry provides direct employment opportunities to 2.6 lakh industrial workers and another 1.4 lakh people in the allied sectors. In the world market, the contribution of this industry is noteworthy. The export earnings from the sector stand at Rs.1200 crore. In export of final jute products, India bags second position in the entire world. Besides, revenue also comes from government and private orders for packaging purposes.The special features of Jute:-• Natural Fiber
• Biodegradable product
• The fibers can be renewed after use
• Eco-friendly in natureIn India, Raw Jute is manufactured in the following states:-• West Bengal
• Assam
• Bihar
• Andhra Pradesh
• Meghalaya
• Orissa
• TripuraThe total production of raw jute in India is almost 90 to 100 lakh bales. The industry gets good support from the government. The crucial support comes in the form of Minimum Support Price. The support price increased from Rs.910 to Rs.1000Textile industry centered on mass production of natural silk and final products from silkIndia is leading producer of silk in the world, second largest producer to be precise. Of the four varieties produced, Mulberry accounts for 88.7 percent, Eri account for 8.4 percent, Tasar 3.8 and Muga silk 0.6 percent. Its contribution to the total world production of silk is about 18 percent.The rearing and breeding of silk worms as well as the production of raw silk are known as Sericulture. The industry is considered as one of the top cottage industries in India. Over fifty thousand villagers are into silk production. One of the most remarkable aspects of this industry is its labor -intensiveness.The different people involved in Sericulture include:-• The workers who produce silkworm seeds
• Farmers who rear the silkworms
• Workers who are into reeling
• Workers who are into twisting the silk
• Workers who weave the silk
• Workers who spin of silk waste
• Dealers of SilkThe significance of Silk Industry can be outlined as follows:-• Fewer Investments required.
• Return on investment quite high
• Nearly 6 million people employed in this industry.In 2004-05, the amount of silk produced stood at sixteen thousand and five hundred metric tones which scaled up to seventeen thousand and three hundred five metric tones during 2005-06. The foreign exchange earned by the industry in 2005-06 was Rs.3158.16 crore.The silk export items of India include:-• Fabrics
• Waste of silk
• Carpets made up of silkHandloom IndustryHandloom industry occupies second position in terms of livelihood after agriculture. Over the years, this sector’s production has increasedDisadvantages linked to Handloom Industry in India• Technology is outdated
• Production system not organized
• The turnaround is relatively low
• Working capital for this industry is pretty low
• Marketing aspects is almost zero
• Innovation is significantly low.Handicraft industry:Handicraft industry is one of the most traditional industries in India.Special features of this industry include:• Capital requirement is reasonably low
• Provides employment opportunities to large number of people.
• Most of the handicraft items are exported; thereby help earn foreign exchange for the artisans and the country.Nearly 63.81 lakh people were employed by this sector.The total number of people employed in this industry amounts to 63.81 lakhs.

Industrial Property Performance Factors

Many property investors choose industrial property as their first type of property investment outside of residential property. This then shows that the first time or smaller property investors believe that industrial property has key advantages for them.The main advantage we can see frequently is that industrial property is relatively simple and basic when it comes to property performance. It is not hard for property investors to know what to do and what to control with property rents, leases, and property maintenance.So what could be some other elements of industrial performance that are worth considering if you were and investor and you wanted to purchase a good property or something with real potential? Here is a list to get you started.These are the most common points of concern and focus in industrial property that we come across as we speak to many investors, tenants, and real estate agents.
Transport routes to the property and those that are used by a typical industrial tenant must be understood. The routes must be easily accessible as a system of raw material supply and product distribution.
Many tenants need raw materials as part of their business operation. What are these raw materials and how easy is it for the tenant to get them? Look at the access factors for air transport, shipping and port access, together with freeways and the main road networks.
The power to the property should be of the type that industry uses. In most cases that is what we call ’3 phase’ or ‘high tension’ power. It is the type of power supply that industry needs for large machinery function. If this power is not available you will have to assess how much it will cost to get it to the property.
Cost and supply of labour force is important to industrial tenants. Invariably they will need people to work in the business. Proximity of the industrial property to local residential areas or towns will help with a source of labour supply; however another advantage with this will be access to public transport for the employees.
Moving the end manufactured goods to their market is quite important to the industrial tenant. Today we see reasonable flexibility with truck transport and road networks however some very heavy or bulky goods will need rail heads as a point of distribution. Rail transport still has the advantage when it comes to large volume and heavy goods.
Industrial property investment seems to be strongest in performance around major cities with established growth cycles. Even in a slow economic cycle these industrial properties will perform given the interaction with the community and reasonable access to end markets.
In good property markets the industrial property tends to give higher levels of return when compared to office and retail property. This is an analysis on average so the other elements of location, tenant selection, and market access are still important to the equation. The industrial property market is still robust when economic cycles are positive.
When economic cycles change to the positive, it is the industrial property that responds first even before office and retail property.
Leasing industrial property is basic and simple. Vacancies are easy to manage providing the property is not too special in design that limits tenant usage.
Rents are usually on a net rent basis and the tenants normally take responsibility for the payment of outgoings. In saying that, the landlord needs to ensure that they have a sound accounting process that checks the tenant in that payment cycle. The landlord does not need or want an unpaid account and fines applied thereto.
When the property market is active, the pre-lease market on new industrial property construction is quite strong. It is the timing of the release of newer industrial projects that needs to be carefully managed.
Owner occupation is an element of industrial property performance that moves in cycles. Reading, developing and selling into that property market can be lucrative. This also says that the owner occupiers of industrial property will also sell out of their owned property. Real estate agents can tap into the major businesses to capture this source of new industrial property listings.
When the property market is ‘strong’ the yields achieved on well positioned industrial property at sale time are usually attractive for the seller. This does say that care must be exercised in having good tenants, great leases, great location, and a well maintained property.
Buyers of industrial property come from two sources. That is the investor market and the owner occupiers. This provides versatility in property disposal if one market segment is slower.
Corporate investors will move property in and out of the balance sheet as the company changes and repositions itself for business advantage. Monitoring the media for such changes will give investors a source of opportunity. The process of ‘sale and lease back’ is common in industrial property.
Ample car parking for staff and customers
Good loading and turning areas for trucks
Functional office areas that support the warehouse operation
Generous warehouse height and entry points for trucks and storage
Security for the premises
Access to quality business communication systems including telephone, data, internet, and mobile communications
Good signage at the front of the property that gives the business a clear identity
Proximity to services such as roads, transport, water, gas, electricity, and other industrial tenants.These elements are the most common that we see in successful industrial property. Whether you be a real estate agent, a property investor, or a business needing a building to occupy, you can start with this basic list and add your special criteria to formulate the profile of a good industrial property in your area.